The International Aspects of State-Owned Enterprises
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THEEMERGING PATTERNS Originsand Motives
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relevant, therefore, to review some of the circumstances under which stateowned trading and state-owned producing enterprises have been brought into existence. The EnterpriseAs State-owned enterprises have been employed to levy taxes by selling at high Fiscal Agent monopoly prices (as in the case of the French and Italian tobacco and alcohol monopolies) or by buying at low monopsony prices (as in the case of Ghanaian cocoa). They have also been used to dispense subsidies through sales at reduced prices (as in the case of Mexico's CONASUPO).In many of these cases, the functions might just as well have been performed by a government ministrythrough a system of direct taxes or subsidies, but enterprises have been assigned the task simply as a matter of accident or of administrative convenience. The fiscal function, in practice, proves to be almost indistinguishable from still another function commonly performed by governments in respect to agriculture-namely, the reduction in the riskthat agriculturalproducers confront by virtue of highly unstable prices. By taxing in bonanza years and paying subsidies in lean years, state-owned enterprises are in a position to reduce the risks that agricultural producers normally confront. In all such instances, of course, the financial statements of the enterprises must be interpreted with care. Large profits may reflect nothing more than the taxing capability of the state, implemented by the grant of a monopoly to the stateowned enterprise, whereas large losses may conceivably be the expression of a conscious policy of grants from the public purse to some part of the national population. Where losses do occur, it is not easy for an outsider to distinguish between those that represent a planned policy of income redistributionand those that are rationalized after the fact in such terms. The Enterpriseas Governments have also taken to creating state-owned enterprises as a means of National developing or maintaining an industry that the private sector seems unwilling to Champion enter or unable to defend. Sometimes these enterprises are created because no private investor, local or foreign, is prepared to set up the wanted facilities. At other times, the objective in creating the state-owned firmis to ensure that the national industry will not be dominated by foreign-owned enterprises.4 In both the advanced and the developing countries, one encounters numerous illustrations of both motivations-for instance, Brazil's principal iron ore producer, Companhia Vale do Rio Doce, and Venezuela's Sidor at different stages in their history exhibited one or another of these motivations. Aerospatiale in France and Rolls Royce in Britain, mentioned earlier, would fall in the same general category. In any case, the governments' ability to assume very large risks and their ability to provide capital
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